The t(8;21) is the second most frequent genetic abnormality associated with human acute myeloid leukemia, present in 12-15 percent of all cases. This translocation fuses the DNA binding domain of AML-1B to ETO, a gene conserved in Drosophila, whose function is unkown. Our work indicates that replacing the C-terminal transactivation domain of AML-1B with nearly all of ETO creates a dominant inhibitory protein. This proposal tests the hypothesis that the inhibition of AML-1B transcriptional activity by the t(8;21) fusion protein is a key event in transformation. Analysis of AML minus/minus demonstrates that AML-1B plays a crucial role in hematopoiesis. In addition, our preliminary data indicate that enforced expression of AML-1B shortens the G1 phase of the cell cycle and stimulates proliferation. Conversely, expression of the fusion protein inhibits the cell cycle in the G1 phase and blocks granulocytic differentiation. Specific aim 1 will determine the regions of AML-1B that mediate cell cycle control and the sequences of AML/ETO required to arrest differentiation. We have also cloned six proteins that interact with the AML/ETO domains needed for transcriptional repression. Specific aim 2 will define the mechanism by which AML/ETO represses transcription and identify which of these interacting factors mediate AML/ETO function. In specific aim 3, we will use an innovative strategy to create transgenic mice that express AML/ETO in myeloid progenitor cells. This approach circumvents the embryonic lethality observed when the fusion protein is expressed during development. The experiments proposed will answer fundamental questions about the role of the t(8;21) in the generation and maintenance of leukemia.